Taxes And Charges Levied When You Buy And Sell Shares In India

Many investors assume when you buy and sell shares in India, there is just the cost or sale price and then the brokerage. This is not true. There are many other charges that are applicable, though they form just a small portion of the charges.

So, let's see what are these charges that are part of your contract note, when you buy and sell shares in India.

Securities Transaction Tax

There will be a securities transaction tax that would be levied. Let us say you sold the shares of Canara Bank for a sum of Rs 26 and the quantity was 100 numbers. Your total sale price would be Rs 26,000. On this there would be a securities transaction tax of 0.01 per cent. So, you would end-up paying Rs 26 as Securities Transaction Tax.

Service Tax on shares

Apart from this there would be a service tax that would be applicable, when you buy and sell shares. In the above sum of Rs 26,000, the service tax would be Rs 9. So, this another small sum and is not a part of the major charges.

Exchange Transaction Tax

This is also a small sum and for a sum of Rs 26,000 barely works out to Rs 1. These charges are really insignificant.

Stamp duty

There is also a stamp duty that is levied when you transact on the exchanges by buying and selling shares. This is in line with the guidelines of the government. While earlier, when there was no trading done in the demat form, investors used to physically buy stamps and stick them behind the certificate. That has been eliminated with the advent of electronic trading.

Other charges

Many contracts show education cess, but, the same do not seemed to be levied.

Brokerage charges

This is the biggest chunk of charges on your contract note. If you are a trader and go through the low cost brokerage houses, your brokerage could be Rs 9, Rs 15 or Rs 20 per trade executed.

If it is other brokerages, it could range from 0.05 per cent to 0.10 for squaring off intra day. For delivery based trading brokerage could range from 0.25 to 0.50 by most of the regular brokerage houses.

The above are the charges levied on buying and selling shares in India. You cannot avoid any of these charges, irrespective of buying or selling shares. You can negotiate with your brokerage to reduce the brokerage charges, but, the rest are all mandatory.